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MSP Hike: For Farmers, More Questions From the Answer

By   /  July 12, 2018  /  Comments Off on MSP Hike: For Farmers, More Questions From the Answer

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The central government has increased the minimum support price (MSP) for kharif crops to double farmers’ income by 2022. Farmers will get 1.5 times more than the cultivation cost, which is in accordance with the prime minister’s announcement earlier this year. This is undoubtedly a massive hike in the MSP but a bigger question remains unanswered: Will the hike end the crisis in the farming sector prevailing in the country? Though the central government is optimistic, agriculturalists and economists are not so hopeful. They are of the view that the latest hike is too cosmetic and that it would only add a few more problems instead of solving the crisis.

The apprehension from the experts is not unfounded. Even after the announcement of the hike, it is still not clear how much the government would be buying from farmers. It is impossible to think that an entire agricultural product would find a place considering the limited storage capacity of government warehouses. In such a situation, many farmers will be forced to sell their products to private parties, who will definitely not pay farmers at par with the new MSP. Many fear that the government’s decision might end up helping only a few big farmers. The condition of the small and marginal farmers may not change.

Another contentious point: How will the government keep the fiscal deficit in and around three per cent as promised by Union Finance Minister Arun Jaitley? Everyone knows that the hike in MSP will add an extra burden on the country’s exchequer. Further, oil prices are on the rise in the international market. The government will have to spend nearly INR one lakh crore just to meet expenditures that would be incurred due to the hike in MSP. Yet, only INR 15, 000 crore has been earmarked in this year’s Union Budget (2018-19). From where will the extra money come? There are reports already that apprehensions have been expressed by some senior officials of the Union Finance ministry about the huge expenditure. The government shall have to provide a concrete answer about the issue and sooner than later. The government will have to ensure that its efforts to help the agriculture sector do not derail the country’s economy.

With all these unanswered questions, the hike in the MSP has as usual become a subject of political debate. Opposition parties are alleging that the Narendra Modi government announced such a decision just to woo farmers who are a decisive factor in general elections, and without caring about the financial health of the country. On the other hand, the prime minister himself has stated that the wrong policies of the previous governments had caused the crisis in the agriculture sector.

Amid such charge and counter-charge, there is no denying that farmers in India today are in a dire state. Their income is shrinking and loans are rising. Farmers’ suicide has become a daily occurrence in the country. Farmlands are being looted by land grabbers on the pretext of development. Merely hiking the MSP is not enough. Measures, such as crop insurance, minimum interest loans, proper marketing facilities, cheap fertilizers etc., should be taken along with a hike in the MSP. We need to take a comprehensive approach to end the farm crisis. Being selective will only complicate it.


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